Behavioral Economics and Welfare Analysis

Undergraduate / Graduate

This course studies economic approaches to welfare analysis when people do not choose what is best for themselves. Students will extend standard economic models to accommodate psychological phenomena like overoptimism and inattention, focusing on implications for welfare analysis. They will also learn about modern empirical methods for measuring these phenomena in the real world. The course applies these theoretical and empirical methods to the welfare analysis of several policies, including: the taxation of sugary beverages, bans on so-called "junk fees," and compulsory savings programs (like the U.S. social security system). Students may use this course to satisfy the microeconomics method requirement for the business economics specialization.